Connect for Health Colorado: How many audits are enough?

A conservative watchdog group released a petition Monday demanding an audit of what it calls “the troubled state health insurance exchange.”

The calls for audits have multiplied ever since a Democrat-controlled Senate committee in late March killed a House bill with bipartisan support for expanded state oversight of Connect for Health Colorado. Efforts by Republican legislators to revive the bill before the session ended May 7 failed.

“At a time when many Coloradans are watching each dollar, it’s not fair for those spending our tax dollars to escape oversight,” Americans For Prosperity said in a statement May 12 calling for more audits.

Although established by state law, the health-insurance marketplace is an independent nonprofit. As much as foes of the Affordable Care Act — and of the state exchanges it has spawned — would like to police the new marketplace, it’s not a clear-cut proposition.

“This is a brand-new entity, and no one is quite sure how this is going to work,” state Auditor Dianne Ray said in a recent interview. “If it doesn’t work, what does mean for the state. This is really important.”

Connect for Health’s chief executive Patty Fontneau was officially neutral on whether the General Assembly should broaden the state’s performance audit of the exchange to encompass operations, yet she pointed out existing state and federal oversight was already extensive.

Fontneau told the Senate Health and Human Services Committee in March the exchange underwent federal compliance audits, submitted to an independent, third-party audit conducted under federal standards and complied with other rigorous federal reporting requirements that precluded state involvement. Additionally, she said, the state did already audit exchange finances.

The committee voted 4-3 along party lines to pull the plug on the bill expanding the performance audit to include operations.

Committee Chair Irene Aguilar, D-Denver, said then she didn’t see the point of “throwing more government at the exchange.”

The state’s current performance audit – without the expanded authority – is confined to auditing exchange finances – following the money and looking at controls around it, even though the state is not funding it.

“It’s very narrow authority,” Ray said. “It’s really a fine line of what we can analyze.”

The things the auditor’s office can’t look at, but could if authorized to perform an operations audit, include: Exchange strategies for financial self-sufficiency, IT system security, marketing effectiveness and vetting of prospective employees.

“We can’t look at any of that now,” Ray said. “The state can’t even look at what’s in their projections. They have to be self-sustaining by January 15 when federal funds dry up. We could help them get to self-sustainability.”

According to materials provided by the Office of State Auditor: Performance audits focus on determining the extent to which agency programs and activities meet legislative intent, comply with laws and regulations, operate efficiently, and provide effective services to the public. Specific audit objectives can include determining whether potential cost savings within agencies exist, whether a program’s outcomes are consistent with its goals, and whether services address the desired population or the need they were intended to address.

Ray said an expanded state audit could confirm the information disclosed by exchange staff, but even an expanded audit could not force operational changes.

“We can make recommendations based on industry standards and best practices,” Ray said. “There’s no power or oversight.”

State Sen. Owen Hill, R-eastern Colorado Springs, said whether legislators could affect operations or not, the expanded audit would improve transparency for taxpayers.

“How can we be good stewards of taxpayer dollars if we don’t really know what’s going on?” Hill asked.

Yet exchange supporters see more harassment than stewardship in the continued calls for more audits.

Electa Draper is the health writer for The Denver Post and has covered every news beat in a 22-year journalism career at three newspapers. She has a bachelor's degree in biology and a master's in journalism.